14 Mei 2011

Cuts and Delays to Cost Defence $4.3bn

13 Mei 2011

Two C-130J and a C-130H Hercules fly in formation (photo : Australian DoD)

THE defence forces will give up a staggering $4.3 billion in funding over five years in a combination of cuts imposed by the government and unwelcome savings made because major projects are lagging behind schedule.

The Department of Defence has underspent its budget for new equipment over the past year by $1.1 billion, all of which will be returned to the budget, presumably to be reallocated some time in the future.

The defence budget this year is around $25 billion but does not include the 3 per cent annual increase the Howard, Rudd and Gillard governments have promised they would provide, on average, through the decade.

The budget papers reveal that Australia will spend more that $1.5 billion fighting in Afghanistan and on peacekeeping in East Timor and the Solomon Islands over the next year.

Australia’s contribution to international efforts to deny terrorists a safe haven and training ground in Afghanistan will cost $1.3 billion in 2011-12.

Australian Defence Force operations will cost $140.7 million in East Timor and $44.1 million in the Solomon Islands.

A further $32 million will be used to set up the promised Australian civilian corps rapid deployment fund to send civilian specialists in to help nations recover after wars and natural disasters.

The main Australian Defence Force involvement in Iraq, officially dubbed Operation Kruger, will finally end with the withdrawal of the soldiers who have provided security for the ambassador and diplomats and other officials at the Australian embassy in Baghdad.

That contingent of infantry mounted in armoured vehicles is being replaced by private security contractors supervised by the Department of Foreign Affairs and Trade.

Defence will return $3.1 million previously allocated to this operation to the budget.

Mark Thompson, from the Australian Strategic Policy Institute, told The Australian that would mean that to provide the promised funding in this decade would require rapid growth in defence spending from 2015-16 onwards.

Dr Thompson said Defence had been obliged to return its unspent $1.1 billion to the government because many projects were running badly behind schedule.

On some projects industry had not delivered equipment on time, mainly because of unexpected developmental problems being encountered.

In some cases, companies were also having trouble finding personnel in a tight labour market with the mining industry seeking similar engineering and technical skills.

But, as well, the government was taking much longer than anticipated to approve many projects.

Examples were a RAAF air-to-air refuelling project which was running behind schedule so that defence had handed the government back and unspent $159 million.

Delays in providing unmanned surveillance planes for the army meant $48 million was handed back, delays to the ADF's multli-role helicopter with $97 million handed back and delays to the air warfare destroyer project with $146 million handed back.

Those delays raised the question of whether defence and industry would be able to get organised enough to spend all of that money in a rush once the government got the budget back into the black and reallocated the funding for new equipment.

“If defence has not been able to spend the money it's been allocated already how will they be able to ramp it up suddenly and spend millions more?”

Dr Thomspon said the main driver of these cuts to planned Defence spending was the government being realistic about how much the department could actually spend in the coming years.

Defence capital investment has been cut by $1.3 billion and a similar amount has gone from operating expenses such as the cost of running bases, using equipment and catering.

The department has been told by the government to save another $300 million by reducing the number of additional civilian employees it planned to take on over the next three years from 1655 to 655.

Dr Thompson said the cuts and delays would be a setback for the plan outlined in the 2009 defence white paper to reequip the Australian Defence Force with potent new ships, submarines and aircraft detailed in the government's new Force 2030.

The government has increased the efficiency dividend for defence from 1 percent to 1.5 percent in 2011-12 and 2012-13 and to 1.25 percent in 2013-14 and 2014-15 and expects to save $134.9 million over the forward estimates.

That money will be reinvested by the government and will not go back to defence. As well it has cancelled the plan to buy two additional C-130J Hercules transport aircraft for the RAAF. That will save $111.3 million which will go towards the cost of buying one more massive C-17 Globemaster aircraft costing $252 million.

Another $177 million will be spent buying the big transport ship, Largs Bay, from Britain's Royal Navy top fill the embarrassing gap left by major seaworthiness problems with the RAN's transports HMAS Manoora, HMAS Kanimbla and HMAS Tobruk.

(The Australian)

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